Wall Street Watch

Approximately $700 Million in Securities Affected.

New York, August 20, 2002 -- Moody's Investors Service has placed the Baa2 senior unsecured debt and Baa3 preferred stock ratings of Federal Realty Investment Trust under review for possible downgrade. According to Moody's, this review has been prompted by the destruction in a fire of a major component of the REIT's Santana Row mixed use development project in San Jose, California. Santana Row accounts for approximately 15% of the REIT's investment in real estate properties. As of June 30, 2002, Federal Realty has spent $329 million to build Phase I of the project, which it anticipated to complete in 2003 for a cost of about $500 million. The fire destroyed approximately half of the residential space in the development, and damaged to a not yet determinable extent 18% of the development's retail space. Federal Realty expected to have the retail component of the project, which has been 60% pre-leased, to open on September 19, 2002, and to have a substantial number of residential units ready for occupancy in the fourth quarter of 2002. Moody's believes that the undamaged space in the project is unlikely to be ready for this scheduled opening, while completion of Phase I of the Santana Row development is likely to be delayed.

Moody's review will focus on the overall impact of this setback on the Santana Row development on Federal Realty's credit risk profile. In particular, Moody's will assess the extent of the likely insurance recovery for destroyed or damaged property, and lost rent, associated with the fire. The rating agency will also consider factors likely to affect the REIT's near-term cash-flow generation ability, such as heightened near term lease-up risk, as well as delays in the completion of the project.

The following ratings were placed under review for downgrade:

Federal Realty Investment Trust -- Senior unsecured debt at Baa2; senior unsecured shelf at (P)Baa2; subordinate debt at Baa3; subordinate debt shelf at (P)Baa3; preferred stock at Baa3; preferred stock shelf at (P)Baa3.

Federal Realty Investment Trust (NYSE: FRT) is a real estate investment trust (REIT) specializing in the ownership, management, development and redevelopment of retail properties. At June 30, 2002 the REIT owned or had ownership interests in 153 retail properties across the USA, with assets of approximately $1.9 billion.

New York
Philip Kibel
Vice President - Senior Analyst
Real Estate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
John J. Kriz
Managing Director
Real Estate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653